European stocks slumped as a referendum on Crimea's withdrawal from Ukraine loomed.

The referendum on whether Crimea will join Russia will be held on Sunday. The US has said the move would not be internationally recognised.

US Secretary of State John Kerry was meeting Russian counterpart Sergei Lavrov in London today to defuse the situation. Kerry warned that the US and Europe could take serious action against Russia which stepped up its military intervention in Ukraine ahead of the referendum.

In another hit to markets, economists from Bank of America, JP Morgan and Nomura lowered their growth forecasts for China following a batch of weak data this week.

Data yesterday showed industrial production rose at the slowest pace since March 2009 and retail sales eased to the lowest level in three years.

In Japan, industrial production rose by 10.3% in January, missing analysts' expectations for a 10.6% increase. It compared to a 7.1% advance in December.

Later on, attention will turn to the release of the University of Michigan's US consumer confidence index which is expected to rise to 82 in March from 81.6 a month earlier.

Eurozone employment, German inflation

Eurozone employment increased by 0.1% quarter-on-quarter and declined 0.5% year-on-year in the last three months of 2013, Eurostat said.

For the year through 2013, employment dropped 0.9% from 2012.

German inflation last month climbed 0.5% on the month and 1.2% on the year, federal statistics office, Destatis, said, confirming preliminary estimates published in late February.

The country's inflation remains well below the European Central Bank's (ECB) target of just below 2%.

Builders and miners slide

HeidelbergCement declined after Berenberg downgraded construction stocks, including the German company, to 'hold' from 'buy', citing share price rises over the past year. Holcim Ltd and Lafarge SA also slipped on Berenberg downgrades.

Mining stocks, including Rio Tinto, edged lower as the price of copper dropped on concerns of a slowdown in China.

Pandora fell after a number of funds invested in the Danish maker of charm bracelets agreed to sell a stake worth 4.51bn kroner.

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